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Affluent Investor Confidence Drops

Spectrem’s investor confidence numbers dropped in October almost as much as they climbed in September.

The Spectrem Affluent Investor Confidence Index (SAICI®), which last month surged to an almost 6 ½-year high, plunged 12 points to -4, a nine-month low.

The Spectrem Millionaire Investor Confidence Index (SMICI®) which had similarly reached a nearly 9 ½-year high in September, fell 15 points to 8. This is the largest month-to-month drop since April-May 2009.

The indices measure the investment confidence and outlook of households with more than $500,000 of investables and more than $1 million of investables, respectively.

October experienced gridlock and political stalemate that failed to avert a 16-day government shutdown. Long-simmering partisan divides over the Affordable Health Care Act and the debt ceiling boiled over, and while the market did not suffer feared volatile swings, consumer confidence took a significant hit, falling to its lowest level since the fiscal cliff crisis in late 2012, according to one national survey.

What is this doing to the mindset of the Affluent investor? When asked how they plan to invest in the coming month, significantly more than the previous month said they plan to stay on the sidelines.

Affluent investors are saying in October that stock market conditions are the one factor that is most impacting their current investment plans, but they are keeping an increasingly watchful eye on economic conditions and the political climate, further indication that they feel gridlock in Washington D.C. is preventing substantive progress on the economy.

This, in turn, is has wreaked havoc with the Spectrem Affluent Household Outlook, which in September has risen to its highest reading since January 2011, only to fall in October to an eight-month low. The Outlook, a monthly survey of Affluent attitudes toward financial factors that impact their daily lives, reveals particular pessimism in the director of the economy.

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Spectrem Group strategically analyzes its ongoing primary research with investors to assist financial providers and advisors in understanding the Voice of the Investor.